Ex-RSA Irish Boss Wins $1.4 Million on ‘Sledgehammer’ Ouster

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RSA Insurance Group Plc’s former Irish head was awarded 1.25 million euros ($1.4 million), as a tribunal said the company destroyed his reputation amid a scandal that triggered the biggest sell-off in its shares for a decade.

Philip Smith won his constructive dismissal case against RSA just over 18 months after the company suspended him, a fact which his family learned from reports on national television. He resigned in November 2013, saying forces within the company made him the “fall guy” for accounting problems at the unit.

“Suspending the claimant on national television was the equivalent of taking a sledgehammer to his reputation,” Niamh O’Carroll-Kelly, chairman of the tribunal, said in a ruling obtained by Bloomberg News in Dublin on Monday.

RSA intends to appeal, saying it “fundamentally disagreed” with the judgment. Smith told an Employment Appeals Tribunal in March that RSA effectively forced him out of his 620,000-euro-a-year job after finding holes in his unit. RSA had to inject 300 million euros into the division.

“The tribunal is satisfied from a very early stage in the investigation, or perhaps even before it, the claimant’s fate was determined,” O’Carroll-Kelly said in the ruling. RSA “then went on a fact-finding exercise to justify its predetermined decision.”

Internal Report

During the hearing, Smith said RSA sent a draft internal report into the affair to the central bank without giving him the opportunity to comment on it. The report amounted to “character assassination,” as it effectively accusing him of bullying staff, he said.

Smith presided over a practice of fixing reserves for some large insurance claims below levels recommended by staff, Rory O’Connor, the unit’s former chief financial officer, told the tribunal in March. Smith denied this.

O’Carroll-Kelly said the tribunal “is satisfied” Smith was aware of the reserving practices of the unit.

“Whilst as CEO, he did have responsibility to ensure practices which could attract central bank criticism did not develop or continue, this practice was one that was known by too many high-ranking employees to lay the blame solely at the feet of the claimant,” she said.

A spokesman for Smith declined to comment.

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